* Eurogroup chief says cap on capital buffers nonsense
* France's Sapin considers 5-percent hike as red line
* EU estimates put rise at 25 percent, officials said
(Recasts, adds quotes and details after meeting)
By Francesco Guarascio
LUXEMBOURG, Oct 11 European Union countries were
at odds on Tuesday over a global reform of banking rules with
divergent views about a cap on increases in banks' capital
buffers that might result from the review.
The Basel Committee, banking supervisors from nearly 30
countries, is due to complete its reform, known as Basel III, by
the end of 2016. The new rules are meant to make the sector more
financially sound by reducing reliance on internal risk models.
European banks and regulators have warned against an
excessive increase in capital requirements that could affect
mostly European banks because they use internal models more than
their U.S. rivals, which rely more on standardised methodology.
Higher capital reserves would raise costs for EU banks.
Asked whether there should be a set limit to any hikes in
capital requirements, Eurogroup President Jeroen Dijsselbloem
told reporters before an EU finance ministers' meeting that
discussed the issue: "My approach is different".
Reacting to France's push for a 5-percent limit, he said:
"I haven't heard it. It does not make sense."
French Finance Minister Michel Sapin said a 5-percent hike
would be considered significant and would be opposed by France.
Speaking with reporters after Dijsselbloem's remarks, Sapin
said that the French position was shared by Germany and most
other EU states.
The discussion on Basel at the finance ministers' meeting
was requested by France, with the support of Germany, EU
German Finance Minister Wolfgang Schaeuble kept out of the
quarrel, limiting his comments to saying after the meeting that
European banks should not be penalised.
A proposal for a 5-percent limit was included in a EU
finance ministers' draft statement but was removed from the
final conclusions of a meeting in July, as member states could
not agree on the issue.
The Slovak finance minister Peter Kazimir, whose country
holds the rotating presidency of the EU, said ministers did not
discuss a figure on Tuesday, and pleaded with his colleagues to
keep a common front on the Basel reform.
He referred to the EU position in the conclusions of the
July meeting, where ministers simply urged the Basel group to
avoid a "significant increase" in overall capital requirements
but set no limit.
Officials at banking trade body AFME estimated the new rules
were likely to increase the capital buffer held by lenders by at
least 6 percent on average from the existing figures.
The hike may be as high as 25 percent, according to EU
estimates based on a sample of 95 banks discussed on Tuesday by
EU finance ministers, two EU officials said.
After the meeting, the EU commissioner in charge of
financial services, Valdis Dombrovskis, reiterated EU red lines
for the Basel reform and said proposals may lead to significant
rises in capital requirements as well as increased risks.
(Additional reporting by Frank Siebelt in Luxembourg; Editing
by Alastair Macdonald and Louise Ireland)